The Breakthrough In Britain's 4G Broadband Bedlam

When Britain held its 3G auction in April 2000 it was one of the first European countries to do so, when it holds its 4G auction in mid-2012 it will be one of the last. The 12 year gap has seen Britain slip from mobile innovator to also ran at a time when the economy is in the toilet and always connected portable devices are at the heart of modern business crucial to its recovery. So what was behind this fall from grace and this week are we finally getting somewhere?

There are two short answers to both these questions: infighting and yes - both are fundamentally interdependent. The stakes have never been higher. What the 4G auction represents is Britain's online future for at least the next 10 years. 80 per cent more spectrum is up for grabs than the 3G sale more than a decade ago. Amongst it are 60MHz and 140MHz 'two-way' chunks in the 800MHz and 2,600MHz ranges respectively (each allows simultaneous sending and receiving of data) along with a further 50MHz in the 2,600MHz range which is one way only.

While all of it can host 4G (in itself a misnamed term), capable of delivering initial speeds of between 100 - 160Mbit, the jewel in the crown is the 800MHz band previously used to broadcast analogue TV. Unlike the spectrum used for current UK 3G services, this band travels easily through walls and has a greater range – factors which also allow for fast deployment (and therefore a faster return on investment) since fewer masts are required. So far so good.

Where things break down, however, are finance, fair play and history.

In terms of finance – despite its importance – carriers are not in the cash rich position to bid the astronomical sums that saw the 3G auction put a whopping £22.5bn in UK government coffers. Instead £2-8bn is expected to be hauled in, with most analysts believing a little over £3bn is most likely. Fair play meanwhile sees Ofcom take on a refereeing role to ensure each carrier has a chance to buy a proportion of the spectrum to avoid creating a monopoly. That said history – including bitter battles over mobile termination rates and reallocation of 2G licences for 3G – means no-one trusts each other to do it fairly.

MPs blame the carriers' bickering, the carriers blame the MPs for not freeing up spectrum – notably the 800MHz analogue TV broadcasts - earlier. Both have a point, but all the while time passes. Other countries held their auctions, licenses were agreed and 4G services went live. Something had to give and 48 hours ago it was the government's patience…